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Ontario's new health care super agency can save costs — by spending more

Realizing long-term cost savings demands a larger reorientation of health-care spending — from an emphasis on cost-per-procedure to funding based on patient outcomes.Photo: Illustration by Brice Hall/National Post

Special to Financial Post

Published: March 13, 2019 - 6:30 AM

Canada has a rich history of innovation, but in the next few decades, powerful technological forces will transform the global economy. Large multinational companies have jumped out to a headstart in the race to succeed, and Canada runs the risk of falling behind. At stake is nothing less than our prosperity and economic well-being. The Financial Post set out explore what is needed for businesses to flourish and grow. You can find all of our coverage here.

Ontario Health Minister Christine Elliott’s plans for a sweeping reform of Canada’s largest health-care system includes a promise to streamline services and reduce costs, while improving patient care. As an innovator in this sector, I welcome the government’s focus on patient-centric care. But realizing long-term cost savings demands a larger reorientation of health-care spending — from an emphasis on cost-per-procedure to funding based on patient outcomes.

Currently, Canada operates in a siloed, single-service delivery model. In this system, health-care providers are incentivized to deliver the best care at the lowest cost — for each service. But patients may require more than one service from more than one service provider to address a health problem or to ultimately end up with an acceptable outcome. Add up the costs of these services, of what is called a patient’s “episode-of-care,” and the price tag can look quite different.

Take, for example, total hip replacements (THR). Data from the Canadian Institute for Health Information shows that 8.3 per cent of patients require a second surgery to revise implanted joints. Among younger patients, this is because joints prove unstable. In Alberta alone, according to a recent CBC report, these repeat surgeries come at a cost of $16 million per year.

These statistics should be alarming to both patient advocates and government funding bodies, particularly since approaches that yield better results have been around for decades. Surgical navigation tools pioneered in the 1990s allow for greater accuracy and precision in the selection and alignment of implants. However, orthopaedic surgeons have resisted them, arguing that they add significant expense, complexity and time to each operation. An overwhelming majority instead rely solely on their training and judgement to determine the correct size and alignment of implants in THR.

While it is true that surgical navigation adds to the cost of hip replacement procedures, there is an increasing body of evidence that suggests the improved outcomes it delivers during a patient’s episode-of-care can actually save the health-care system money. A recent review of over 300,000 hip replacements by the Hospital for Special Surgery in New York found that surgical navigation resulted in a 13.5 per cent improvement in complication rates and a 12.6 per cent improvement in readmission rates compared with conventional approaches across a 90-day episode-of-care.

Unfortunately, Ontario’s hospitals do not receive any financial benefit if they save our health-care system money. The province’s proposed health care “super agency” needs to change that, by embracing innovation and reevaluating procurement.

Instead of a silo-based system that works to keep each service as inexpensive as possible, we need a value-based procurement system that focuses on delivering best outcomes for the lowest price across an episode-of-care. Canadian medical technology innovators, who create tools for surgeons and hospitals around the world, need to be part of this transformation here at home.

We need to rethink the status quo to deliver the consistent, high-quality care patients deserve.

Armen Bakirtzian is CEO and co-founder of Intellijoint Surgical. He is also a member of the Council of Canadian Innovators and part of the federal government’s Health/Bio-sciences Economic Strategy Table.